There are a number of things to consider when investing. You first need to consider how long you will be investing your money. Then, how much risk are you willing to take? What are your goals for this money? Will you need to take regular withdrawals or will the money not be needed anytime soon?
These are important questions to answer when you are considering investing, and depending on what your individual situation is, there may be additional issues that need consideration.
But there are two important things to consider that often get overlooked or ignored when investing your money that can make a huge difference in your overall investment results: 1) how much is it costing you to invest, and 2) how can you best tax-manage your investments.
Most investors have no idea how much it is really costing them to invest. Often, there are sales charges, management fees, transaction costs, marketing costs, and sometimes costs that are only disclosed in the fine print.
If you could save yourself even one percent per year on your investment costs, that could translate into tens or even hundreds of thousands of dollars, or more, over time. If you are a client of mine, you already have benefited from the low-cost portfolio you are invested in.
When it comes to taxes, you should always know what the tax ramifications of any sale in your portfolio will be before you sell. And your advisor should do everything they can to minimize the amount of taxes you pay as long as it doesn’t compromise your investment strategy. I don’t believe that taxes should drive every investment decision but they are a very important consideration.
One thing to always remember when investing is that while it’s important to earn as much as possible on your investments, it’s even more important to maximize what your keep, after all fees and taxes have been paid.
So be sure you always understand the cost of investing and how taxes will impact any moves that are made in your portfolio. Be certain you are capturing every dollar you are entitled to.
You’ll be amazed at how much these two things can contribute to your investment success.